Mendip House Nursery and Pre-school in Weston-super-Mare, Somerset, lost out after a child began the term there but left before he could be registered for the free entitlement. When he registered elsewhere, the entire funding automatically went to his new nursery.
North Somerset County Council - one of the original nine pathfinders in the Early Years Single Funding Formula (EYSFF) - is currently consulting with providers to try to improve funding methods.
Anna Latham, head of nursery, told Nursery World, 'We've written letters to everyone, including Vince Cable, the business Secretary, and North Somerset Council. We've done this because at the moment there are many issues and concerns about the funding and there are additional costs, like the proposed new pensions contributions and VAT rise.
'Our biggest immediate concern is the practice of "head count week", when children have to be registered for the free entitlement, which for us took place on the week commencing 4 October. If a child is with you from the end of August but leaves before head count week, then you cannot claim the free entitlement back on those five weeks. We were £288 out of pocket for this term when that happened.
'The funding should follow the child, so that we receive re-imbursement for services provided. Our fees are higher than those paid by the council, but we have to provide this service. I know of no other business where funds are controlled by an outside agency and then money is not paid for services given.
'The same happens if you have a child join the setting the week after head count week, as you are obliged to take the child but you cannot claim any money back until the following term.'
A consultation on how attendance patterns affect funding for early years settings finished on 3 December, and the results will be published in January.
A statement by the county council said, 'The group will look at all provider responses in January and put forward recommendations for any changes to the formula to the Strategic Schools Forum for implementation from April 2011.'
As one of the first-wave pathfinders for the EYSFF, North Somerset issued its first consultation in 2007 and introduced the formula in April 2009.
The consultation was carried out by the Early Years Formula Review Working Group, made up of representatives from across the sector.
